Planning Your Retirement The Local Government Pension Scheme

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Your State PensionIn addition to your LGPS benefits, you may also qualify for a state retirement pension paid by theGovernment from state pension age.The Basic Pension is based on the National Insurance contributions you pay, or are given as credits, duringyour working life.The Additional State Pension, also known as the State Earnings Related Pension Scheme (SERPS) or StateSecond Pension (S2P), is the part of your state pension that depends on your earnings since April 1978. LGPSmembers are contracted out of the Additional State Pension and most pay lower national insurancecontributions as a result.More information on your state pension is available from the Pension Service – see page 4.State pension age is 65 for men and 60 for women. However, from the year 2020, the Government will haveequalised the state pension age for both men and women at 65.The increase in the state pension age for women will be phased in gradually from the year 2010 as shownhere:Date of BirthState pension ageBefore 6th April 1950 606th April 1950 - 5th April 1951 Between 60 & 616th April 1951 - 5th April 1952 Between 61 & 626th April 1952 - 5th April 1953 Between 62 & 636th April 1953 - 5th April 1954 Between 63 & 646th April 1954 - 5th April 1955 Between 64 & 65After 5th April 1955 6512
Early RetirementCan I retire early?If you have at least three months total membership or have brought a transfer value into the LGPS you canelect, in writing to your employer, to retire and receive your LGPS benefits at any time from age 60 onwards.Between and including the ages of 55* and 59 you may also elect to retire and receive your LGPS benefits, butonly if your employer gives their consent. This is an employer discretion and under the LGPS your employer’spolicy with regard to this must be included on their Policy Statement.(*50 for existing members at 31.3.2008 until 1.4.2010)Will my pension and lump sum be reduced if I retire early?If you choose to retire before age 65 your benefits may be reduced to take account of being paid for longer.Your pension and lump sum are initially calculated as detailed in the section on LGPS Retirement Benefits (seepage 5) and are then reduced.Your employer can agree to waive these reductions on compassionate grounds.How much your benefits are reduced depends on how early you draw your benefits, how much membershipyou have and when you joined the Scheme.• If you joined the LGPS after 30 September 2006Your benefits will be reduced if paid before age 65. The reduction is based on the length of time (in years anddays) that you retire early - from the date your benefits are paid to age 65. The earlier you retire, the greaterthe reduction.Example:A man who joined the LGPS in October 2006 asks to retire at 60. He is choosing to receive his benefits fiveyears before 65, so his pension and lump sum will be reduced as follows:Pension reduction: 24%Lump sum reduction: 12%• If you were already paying into the LGPS on 30 September 2006Some or all of your benefits paid early could be protected from reduction.To decide if your benefits should be reduced if you choose to draw them before age 65, we use what is calledthe 85-year rule.The 85 year rule is satisfied if your age at the date you draw your benefits and your Scheme membershipadd up to 85 or more (each in whole years).If you are part-time, your membership counts towards the 85 year rule at its full calendar length.Working out how you are affected by the 85-year rule can be quite complex, but this section should help youwork out your position.13
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Planning Your Retirement The Local Government Pension Scheme

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